Wednesday, July 21, 2010

personal finance

The Real Damage Calculates the True Cost of a New Purchase on Your Credit Card

Webapp The Real Damage calculates the true price of adding another purchase to a credit card that's already carrying a balance.

The best way to avoid throwing away money on credit card interest is simply to not carry a balance. (A good portion of Lifehacker readers pay off their cards every month.) But if you're in the process of digging out from credit card debt, it can still be tempting to put the occasional purchase on the card, particularly if it's not that expensive. The catch, of course, is that if you take the added interest that accrues on the increased balance of your debt into account, over time that price quickly grows—and that's the dollar amount The Real Damage focuses on.

Plug in the price tag of an item you're interested in, along with the APR, balance, and your current monthly payment on your credit card, and it'll figure out the true damage. Once you've got a more accurate picture of the price, then you can decide if it's worth it.

The social media revolution has given way to a generation of tech-savvy and interconnected young Americans. Youthful social media users share their personal lives online, tweeting and posting everything from their relationship status to their current location to their latest purchases. Yet, when it comes to discussing deeper personal finance issues or seeking personal finance advice online, the majority of young adults typically shy away from the web.

AARP recently conducted a national study of young adults in the 18 to 34 age bracket; 57 percent of respondents said that money (specifically the burden of paying bills and carrying debt) was their primary concern. Facing a recession and a brutal job market, young adults are starting to pay more attention to their financial autonomy and planning, yet only 1 in 10 respondents reported sharing financial information or seeking financial advice through social media.

This is starting to change with the advent of trustworthy, unbiased online personal financial resources -- websites that enable users to monitor their own spending, create short-term and long-term financial plans and get trusted financial advice. In fact, 85 percent of young people who have used social media for personal finance advice have reported that doing so made them feel "more confident" about their finances.

These new financial resources are breaking down the taboo of sharing, discussing and managing personal finance online. Whether you are a tech-savvy, social media guru or someone who spends a limited amount of time on the web, you can very easily leverage the internet to gain a greater understanding of your personal finances in a few short steps.

1. Make the most of online banking to make your life easier and keep your finances organized. Online banking is great because it offers quick, easy, 24-hour access to your checking and savings accounts. Here are three ways to make the most of online banking:

  • Set up direct deposit for your paychecks so your salary (or other form of income) gets transferred directly and securely into your checking account.

  • Set up online bill pay for your monthly bills -- your monthly payments will automatically be transferred from your checking account on a designated date each month. If you are not ready to commit to monthly bill pay or simply want to monitor your bills more closely, you can choose a one-time monthly payment. (*Remember to only set up automatic payments to companies or people you trust)

  • Set up calendar alerts two to three days before your bills are due to remind you to pay on time -- never miss a payment or your credit history will take a hit.

2. Start utilizing trusted and unbiased personal finance sites to learn more about personal finances.

LearnVest and other personal financial sites help you manage and understand your finances through tools, games, discussion pages and often, targeted daily newsletters. Whether you need help figuring out how to open an IRA, pay down credit card debt and student loans or find the right health insurance for you and your family, these sites offer expert, step-by-step advice -- for free. Many of these sites employ financial experts to answer your questions or guide you through a financial issue.

3. Use these websites for financial advice pertaining to family life or career changes.

Whether you are preparing for a baby or changing jobs, these sites will help you understand and navigate your way through these life changes. Learn how to negotiate for a raise, handle a tricky situation with your colleague or boss, and choose the employee benefits that are right for you. While personal finance websites are small in number, most of them include live discussion pages (similar to Facebook or Twitter pages) where you can chat with other users whose financial circumstances are similar to your own. Ask users on the site about techniques they use to give themselves a financial advantage in the workplace or to maintain financial autonomy in their marriage.

4. Use social media to find great discounts and deals.

There are tons of discounts and deals to be found on the web. These range from Twitter-only deals from sites like AmazonMP3, JetBlueCheeps, CheapTweet to Promo Code Websites like RetailMeNot, Coupon Cabin, CouponChief.

The AARP study found that young people feel a pinch on their social budgets -- 69 percent say that they suggest low-budget entertainment options and 57 percent say that they sometimes skip going out with their friends for financial reasons. Use social networking to communicate with friends and share information to come up with fun, budget-friendly things to do.

5. Get online and get (free) help to get out of debt.

Many websites offer step-by-step guides to help you take the right steps to get out of debt. With these online checklists, you'll learn how to get a free credit report online (I recommend using!) differentiate between good debt and bad debt, and take the necessary steps to pay down your credit card.

While I strongly encourage my readers to take advantage of the internet and social networking platforms to gain a greater understanding of their personal finances, it is extremely important to be safe, smart, and responsible when it comes to sharing, discussing, and managing your finances online. There are many random, unprotected sites online that appear safe to use and are ready to accept credit card information. You wouldn't give a stranger off the street your credit card information, so be extra cautious about who you are sharing it with online. For the most part, never share certain personal financial information, i.e. credit card information or bank account information, unless it is with your bank, or a site that you have confirmed is trusted, secure and password protected.

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